Bonum Certa Men Certa

The $348 Million Cash Infusion That Won't Last Forever

A financial Web site that shills for Microsoft (there's affiliation and proven track record) has just published its take on NOVL.

What [Novell] management says:

Isn't it sweet to enlist the competition to help sell your own products? Novell's Linux segment boosted sales by 114% over last year, according to the latest quarterly report, and it was "largely due to the strength of the Microsoft agreement," according to Chief Financial Officer Dana Russell.

What [Novell] management does:

Don't get too excited by the cash flow jump in January -- that was $348 million of up-front payments from Microsoft making its way onto the cash flow statement in a one-time deal. Excluding that windfall, free cash flow has been negative in each of the last two quarters.


Novell's bank balance is now Microsoft dependent. It didn't have to be like this, but that's the route which Novell has chosen. Depending on a fierce rival is never a good strategy.

Remember what Jeremy Allison had to say about the $348 million paid by Microsoft. It's like being paid to chew an insect. Novell is not the only company to have been paid (bribed) in this way.

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